Merchant fees have covered the cost of maintaining Burlington’s Church Street Marketplace since the pedestrian mall was created in 1981. Now the Marketplace Commission wants Burlington taxpayers to pay their share.
This fall the Commission will formally ask the Burlington City Council to chip in for a portion of its $83,600 maintenance budget. One revenue scheme considers assessing a fee on City Hall and the Firehouse Gallery for the space they occupy on Church Street. Based on their square footage, the buildings could generate $40,000 a year for the Marketplace.
“It’s really an issue of fairness,” says Commission chairman Jeff Nick, who owns the Borders bookstore building on the corner of Church and Cherry streets. “When they set up the Marketplace, there was never a corresponding credit given back to the Marketplace for taking on the services that the city no longer had to take on.”
Ron Redmond, executive director of Church Street Marketplace, says his department is “unsustainable” without a new source of revenue. Maintenance costs are going up, and for two years the Marketplace hasn’t raised the “common area fees” that fund maintenance, in deference to merchants hit by recession.
The Commission can’t cut staffing any deeper, Redmond says, and doesn’t want to raise fees on businesses for fear they’ll relocate to the suburbs where rents are cheaper.
Marketplace commissioner Buddy Singh paints a bleak picture. “Blight ... and dollar stores on Church Street,” says Singh, a loan officer at Spruce Mortgage. “You can see the trend. Retail downtown is struggling in comparison to outlying areas of Chittenden County. And as Church Street goes, so goes people’s perception of downtown.”
Others aren’t convinced that businesses can’t pay more. City councilor Emma Mulvaney-Stanak, the lone Progressive on the council, says sales-tax figures suggest business is not as bad as some are making it out to be.
Claims that merchants are one fee hike away from fleeing “sort of ignores the reality of what we’ve seen,” Mulvaney-Stanak says, adding that the needs of Church Street should be carefully weighed against those of other city neighborhoods.
Revenues from the local option sales tax — a penny tax charged by the city, which is a measure of retail health in Burlington — were higher in the first quarter of 2010 than at any time since December 2008. That counts all city retailers, not just those on Church Street.
Asked if that proves Marketplace merchants can pay more, Redmond says he’s not sure.
“That’s the $64,000 question,” he says. “Where is the tipping point? That’s the discussion we need to have as a community.”
Today, the vacancy rate on Church Street stands at 8.3 percent — a number that could rise next March if a new tenant isn’t found to replace Old Navy, which just announced plans to vacate its 25,000-square-foot store. In 2009, the vacancy rate was 7 percent overall. It peaked at 11 percent last holiday season.
The Marketplace’s single biggest cost is $45,000 for snow removal, a clear-and-dispose operation that goes far beyond what city snowplows ordinarily do on Burlington streets. Street lights and holiday lights cost $10,000, trash removal runs $7500 and water sewage services cost $1800.
The Marketplace isn’t looking for the city to perform those services itself, but rather to help pay for the private contractors that do the work now.
“We need to differentiate between the normal plowing that would have gone on and the enhanced snow removal that we do here on the Marketplace,” Nick says. “We’re not saying we ought to be reimbursed for the enhanced portion, but the normal portion the city would pay for snow removal, trash removal, tree maintenance.”
The shared maintenance idea has been kicked around with city officials for years, Redmond says, but until now the Marketplace hadn’t put together accurate cost figures. Commissioners recently pitched the cost-sharing idea in a meeting with Burlington’s chief administrative officer Jonathan Leopold, who was out of town at press time and could not be reached for comment.
Church Street property owners pay fees based on ground floor area, currently $2.50 per square foot, which they generally pass on to their tenants. Those fees cover about $650,000 of the Marketplace Commission’s $791,983 yearly budget.
Most merchants pay between $3000 and $10,000 a year in fees. Borders pays the most: $42,613 a year. The city pays the least: $1354 for the kiosk on the corner of Church and College.
If Redmond succeeds in getting the idea before the Board of Finance, there’ll be at least one sympathetic councilor at the table.
“I think we need to be very careful about raising fees on the Marketplace,” says councilor Kurt Wright (R-Ward 4). “They have to be careful they don’t make fees so high we begin to lose businesses.”